In his bestselling The End of History and the Last Man, Francis Fukuyama argued that the end of the Cold War would also mean the beginning of a struggle for position in the rapidly emerging order of 21st-century capitalism. In Trust, a penetrating assessment of the emerging global economic order "after History," he explains the social principles of economic life and tells us what we need to know to win the coming struggle for world dominance. Challenging orthodoxies of both the left and right, Fukuyama examines a wide range of national cultures in order to divine the underlying principles that foster social and economic prosperity. Insisting that we cannot divorce economic life from cultural life, he contends that in an era when social capital may be as important as physical capital, only those societies with a high degree of social trust will be able to create the flexible, large-scale business organizations that are needed to compete in the new global economy. A brilliant study of the interconnectedness of economic life with cultural life, Trust is also an essential antidote to the increasing drift of American culture into extreme forms of individualism, which, if unchecked, will have dire consequences for the nation's economic health.

Francis Fukuyama, a senior social scientist at the Rand Corporation, lives in McLean, Virginia.

Chapter 1 On the Human Situation at the End of HistoryAs we approach the twenty-first century, a remarkable convergence of political and economic institutions has taken place around the world. Earlier in this century, deep ideological cleavages divided the world's societies. Monarchy, fascism, liberal democracy, and communism were bitter competitors for political supremacy, while different countries chose the divergent economic paths of protectionism, corporatism, the free market, and socialist centralized planning. Today virtually all advanced countries have adopted, or are trying to adopt, liberal democratic political institutions, and a great number have simultaneously moved in the direction of market-oriented economies and integration into the global capitalist division of labor.As I have argued elsewhere, this movement constitutes an "end of history," in the Marxist-Hegelian sense of History as a broad evolution of human societies advancing toward a final goal. As modern technology unfolds, it shapes national economies in a coherent fashion, interlocking them in a vast global economy The increasing complexity and information intensity of modern life at the same time renders centralized economic planning extremely difficult. The enormous prosperity created by technology-driven capitalism, in turn, serves as an incubator for a liberal regime of universal and equal rights, in which the struggle for recognition of human dignity culminates. While many countries have had trouble creating the institutions of democracy and free markets, and others, especially in parts of the former communist world, have slid backward into fascism or anarchy, the world's advanced countries have no alternative model of political and economic organization other than democratic capitalism to which they can aspire.This convergence of institutions around the model of democratic capitalism, however, has not meant an end to society's challenges. Within a given institutional framework, societies can be richer or poorer, or have more or less satisfying social and spiritual lives. But a corollary to the convergence of institutions at the "end of history" is the widespread acknowledgment that in postindustrial societies, further improvements cannot be achieved through ambitious social engineering. We no longer have realistic hopes that we can create a "great society" through large government programs. The Clinton administration's difficulties in promoting health care reform in 1994 indicated that Americans remained skeptical about the workability of large-scale government management of an important sector of their economy. In Europe, almost no one argues that the continent's major concerns today, such as a high continuing rate of unemployment or immigration, can be fixed through expansion of the welfare state. If anything, the reform agenda consists of cutting back the welfare state to make European industry more competitive on a global basis. Even Keynesian deficit spending, once widely used by industrial democracies after the Great Depression to manage the business cycle, is today regarded by most economists as self-defeating in the long run. These days, the highest ambition of most governments in their macroeconomic policy is to do no harm, by ensuring a stable money supply and controlling large budget deficits.Today, having abandoned the promise of social engineering, virtually all serious observers understand that liberal political and economic institutions depend on a healthy and dynamic civil society for their vitality. "Civil society" -- a complex welter of intermediate institutions, including businesses, voluntary associations, educational institutions, clubs, unions, media, charities, and churches -- builds, in turn, on the family, the primary instrument by which people are socialized into their culture and given the skills that allow them to live in broader society and through which the val